April 23, 2024

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Cineworld confirms it is considering bankruptcy

Cineworld has admitted that it is considering bankruptcy in the US as the movie theatre giant struggles with $5 billion in debt.

According to the company, which also owns the Picturehouse chain in the UK, there would be “no substantial impact” on the workforce and its theatres would “remain open for business.”

More than 28,000 people work for Cineworld globally.

Like other movie theatre companies, Cineworld was severely harmed by the pandemic.

Several theatres had to close for extended periods of time during the lockdowns or operate at a reduced capacity due to social distance restrictions.

Top Gun: Maverick, starring Tom Cruise, has made $1.8 billion globally, ranking in the top 10 highest-grossing films of all time.

However, Cineworld issued a warning last week, stating that fewer blockbuster films were being released, which was affecting admissions.

Before the outbreak, Comscore reported that worldwide box office receipts in 2019 hit a record $42.5 billion, aided by films including Avengers: Endgame and Frozen 2.

The chains of movie theatres have also been facing a major challenge from streaming services, whose popularity increased during the lockdowns.

In 2020, when theatres had to close because of the coronavirus, Universal Pictures released Trolls: World Tour online at the same time. This led to a fight between Cineworld and its rival AMC, which owns the chain of Odeon Cinemas.

Later, Cineworld and Warner Bros. reached a deal to show films in theatres before they are streamed.

More recently, as a result of consumers’ making spending cuts owing to the rising cost of living, Netflix reported a sharp fall in members.

On Monday, Cineworld revealed that it was looking into several business restructuring options, including going through with Chapter 11 in the US. This makes it possible for a company to continue running while negotiating with its creditors.

The stock price of Cineworld significantly climbed on Monday morning. The share price is at just over 4p, which is still significantly lower than where it was at the start of 2020 when it hit 220p before the pandemic hit.